On Our Radar

On Our Radar

House Walks a Fiscal Cliff Tightrope

Republicans in the House of Representatives pulled a bill from a vote late Thursday night aimed at staving off a series of tax hikes associated with the fiscal cliff after failing to shore up enough votes to pass it.

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Shortly after that announcement, Speaker John Boehner released a statement saying it’s now up to the Senate to come up with a viable plan to avert the effects of the fiscal cliff set to begin at the start of the new year.

"Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff. The House has already passed legislation to stop all of the January 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation's crippling debt,” Boehner said.

In response to the events on Capitol Hill, White House Press Secretary Jay Carney released a statement reiterating days of insistence the president doesn’t want to see taxes increases on 98% of Americans and 97% of small businesses.

“The president will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy,” the press secretary wrote.

Split Decision

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Earlier Thursday night, the Spending Reduction Act cleared a vote in the House by a slim margin of 215-209. The bill, which is now in the Senate’s hands, replaces a series of automatic spending cuts.

House Republicans didn’t have time to celebrate the victory of the bill’s passage, though. Immediately after, the legislative body quickly gaveled into recess, signaling doubts there was enough support to pass the second part of Boehner’s “Plan B” legislation – the Middle Class Tax Cut Act, aimed at limiting tax increases to the wealthiest Americans. The House remained in recess for more than an hour, further deepening concerns there would not be a vote on the second bill Thursday night.

Boehner later announced the House would not in fact vote, but instead remain in recess until next Wednesday.

After the House adjourned Thursday night, Congressman Tim Huelskamp of Kansas weighed in on the night’s events. He said what many call a Republican failure, he considers a kind of success.

“Republicans should not be forced to vote for a ‘show’ bill that asks us to compromise on our principles. For the last two years, the agenda has been 1) to end job-killing tax hikes and 2) to foster economic growth for revenue; ‘Plan B’ abandons those goals – and our convictions right alongside them,” he said in a prepared statement.

Attempting to Avert a Fiscal Crisis

Immediately following the House vote on the Spending Reduction Act, the White House released a strongly worded statement saying it opposes the House bill. It said while sequestration is undesirable for both of the nation’s political parties, the bill undermines the intent of the Budget Control Act of 2012, which set the stage for sequestration.

“The bill's unbalanced provisions fail the test of fairness and shared responsibility. At the same time that the House is advancing a bill to extend tax cuts for wealthy individuals while raising taxes on 25 million students and working families,” the White House said.

The approved bill is unlikely to go much further. Senate Majority Leader Harry Reid vowed not to bring the bill up for a vote in that chamber and President Barack Obama threatened to veto the bill should it land on his desk in the coming days.

The fight over what to do about the nation’s looming fiscal crisis has dragged on for months as the president and congressional leaders remain locked in a bitter battle to stave off a potential fiscal disaster by January 1. With the end of the year approaching, so are a series of automatic tax increases and massive spending cuts known as sequestration.

Indeed, in a sign of the powerful blow the fiscal cliff could deal to the U.S. economy, stock futures tumbled deep into the red late Thursday following the news from Capitol Hill. Futures signaled a triple-digit decline for the Dow Jones Industrial Average when Wall Street opens for business on Friday.